A well-seasoned issuer is a firm that either has at least $100 million public worldwide
common equity float held by nonaffiliated, OR has issued an aggregate of at least $100
million of registered non-convertible debt securities in the past three years.
a. True
b. False
Answer:
Controlling shareholders, but not officers or directors, of a corporation may use the
corporation’s confidential information for personal gain.
a. True
b. False
Answer:
A preference given by a country to domestic products in government procurement is a
type of nontariff barrier to trade.
a. True
b. False
Answer:
In contrast to the federal government, state governments have general powers not
specified in the Constitution. These general powers are often referred to as __________
that protect the __________.
a. Habaeus corpus powers; health, safety, and welfare of the people
b. Subpoena powers; health, safety, and welfare of the people
c. Police powers; health, safety, and welfare of the people
d. Criminal indictment powers; health, safety, and welfare of the people
Answer:
A design defect may result from the manufacturer’s choice of the product’s materials.
a. True
b. False
Answer:
If incorporators cannot show substantial compliance with statutes regarding
incorporation but can show that they were unaware of any defect and acted in good
faith, a court may treat the entity as a(n):
a. de jure corporation.
b. real corporation.
c. de facto corporation.
d. equitable corporation.
Answer:
__________occurs when a __________, such as the name, address, Social Security
number, and/or name of the employer, and then uses this information to access the
victim’s credit.
a. Identify theft,thief steals personal information
b. Breach of service, doctor uses patient information
c. Intentional infliction of emotional distress, thief steals personal information
d. Trespass to chattels,thief steals personal information
Answer:
Courts usually consider advertisements to be only an offer to deal.
a. True
b. False
Answer:
The BP oil spill in the Gulf of Mexico led to the largest accidental oil spill in history.
a. True
b. False
Answer:
Under GATT’s principle of __________ tariffs, each time tariffs are reduced, they may
not be raised again without compensation to other World Trade Organization members.
a. absolute
b. based
c. bound
d. nationalized
Answer:
Under the __________ rule, when a contract is unambiguous any evidence of
contemporaneous statements are __________in court.
a. parol evidence, admissible
b. parol evidence, inadmissible
c. statute of frauds, inadmissible
d. statute of frauds, admissible
Answer:
Assuming no exemption applies, what is the penalty for a violation of section 5 of the
1933 Act through offering a security for sale without an effective registration statement
or by means of a noncomplying prospectus?
a. The purchaser may keep the shares if the investment proves successful; or if within
one year from the date of purchase the investment proves unprofitable, the investor can
get his or her money back.
b. The purchaser must keep the shares if the investment proves successful; or if within
one year from the date of purchase the investment proves unprofitable, the investor will
be refunded his or her money.
c. The investor has no option to keep the shares but will be refunded his or her money.
d. The investor must hold the shares for at least two years but will be refunded his or
her money if the investment has failed to show a profit within that amount of time.
Answer:
Which of the following is true regarding any duties of controlling shareholders in
relation to control of a corporation?
a. Controlling shareholders owe no duties other than to maximize their own wealth.
b. Controlling shareholders generally have a duty to control the corporation in a fair,
just, and equitable manner, known as the standard of entire fairness.
c. Controlling shareholders may act to maximize their own wealth only so long as they
do not intentionally harm and exhibit bad faith toward minority shareholders, a standard
known as minority shareholder respect and fair dealing.
d. Controlling shareholders must appoint minority shareholders to vote a certain
percentage of their shares in instances in which the minority shareholders demand that
right.
Answer:
A legally astute manager understands that legal analysis is often ambiguous.
a. True
b. False
Answer:
Tariffs are a means by which imports may be limited.
a. True
b. False
Answer:
Polly sold Jason a used car for $1,000. Their contract provided that the engine in the car
was in good shape, a true statement as far as Polly knew. Unfortunately, the day after
Jason purchased the car, it broke down and was discovered to have significant engine
problems. Jason told Polly that he wanted a refund. Polly told him that he was not
entitled to a refund because she did not lie and that as far as she knew, there was
nothing wrong with the car. Which of the following is true?
a. Jason is entitled to a refund because of a breach of an express warranty.
b. Jason is entitled to a refund because of a breach of the implied warranty of fitness for
a particular purpose.
c. Jason is entitled to a refund only if he can obtain evidence that Polly lied.
d. Jason is not entitled to a refund under any circumstances because the vehicle was
used.
Answer:
The main issue in CASE 6.3 National Association of Manufacturers v. National
LaborRelationsBoard (2013)was whether the NLRB:
a. had the authority to promulgate a rule stating that the employer’s failure to post a
notice constituted an “unfair labor practice.”
b. had Congressional intent to enact a regulatory program requiring notices to all its
employees.
c. had exhausted all administrative relief before it filed suit.
d. had an obligation to follow its own rules before it became binding on the public.
Answer:
Arbitrary marks are real words whose ordinary meaning has something to do with the
color or shape of the trademarked product.
a. True
b. False
Answer:
Fact Pattern 7-1
Prudence offered to sell her car to Danny for $3,000. Danny was not sure what to do, so
he asked Prudence if she would hold the offer open for him for one week for $50.
Prudence said sure, and the parties signed a contract to the effect that Prudence would
hold the car. A few hours later, Bobby unexpectedly offered Prudence $3,500 for the
car, and Prudence sold it to him on the spot. Danny decided to buy the car, but when he
came by to pick it up the next day, it was gone. Prudence gave Danny his $50 back
telling him that was her only obligation and that if he had any complaints, he could take
it up with Bobby. Danny found a similar car the next week for $3,500 and purchased it.
Refer to Fact Pattern 7-1. Did Danny have any type of contract with Prudence, and if so
what type?
a. Danny did not have any type of contract with Prudence.
b. Danny had an option contract with Prudence.
c. Danny had a hold contract with Prudence.
d. Danny had a conditional contract with Prudence.
Answer:
In the Pakootas v. Teck Cominco Metals, Inc. case discussed in the text, plaintiffs sued
the defendant Canadian corporation in a United States court, regarding an order under
CERCLA pertaining to its contamination of water in Canada that reached the U.S. Was
the Canadian corporation subject to the courts of the United States?
a. The court ruled that the defendant lacked the minimum contacts necessary to require
it to submit to the jurisdiction of a U.S. court.
b. The court ruled that subject matter jurisdiction did not exist.
c. The court ruled that the defendant was subject to jurisdiction in the U.S. court.
d. The court ruled that the defendant lacked the minimum contacts necessary to require
it to submit to the jurisdiction of a U.S. court and that subject matter jurisdiction did not
exist.
Answer:
Alice, the president of ABC Bank, had a meeting with Fred to discuss the fact that he
was having difficulty making the payments on his loan that was guaranteed by Sylvia.
Fred requested that Alice provide a grace period to Fred and allow him to miss a few
payments without penalty in order to catch up his finances. Alice had no objection.
Assuming the guaranty agreement did not address such situations, is Alice acting
prudently and why or why not?
a. Yes, because Sylvia, as a guarantor, has no rights to oppose any action of the bank.
b. Yes, because while Sylvia has certain rights in regard to actions taken by the bank,
she had no right to oppose the provision of a grace period since it is unlikely that
allowing such a grace period would impair Sylvia’s interests.
c. No, because Alice should have obtained the written consent of Sylvia in the form of
an affirmation of the guaranty in view of the grace period.
d. No, because as a matter of equitable business practice, Alice should have put Sylvia
on notice although Alice did not increase the bank’s exposure by failing to do so.
Answer:
The __________ theory applies to the situation in which owners of a corporation have
so mingled their own affairs with those of the corporation that the corporation does not
exist as a distinct entity.
a. undercapitalization
b. alter ego
c. per se
d. absolute
Answer:
The Toxic Substances and Control Act applies only to chemical substances
manufactured in the U.S., not to imported chemicals.
a. True
b. False
Answer:
Fact Pattern 4-2
Wally, a law school student, is an intern for Rebecca, an assistant professor who is
attempting to get tenure at Imperial Law School in part by getting an article published
on the right to a jury trial. Rebecca asks Wally to explain to her the right to a jury trial
under the U.S. Constitution as applied to jury trials involving state law.
Refer to Fact Pattern 4-2. What should Wally tell Rebecca regarding whether the U.S.
Constitution requires that jury trials be held in federal civil court cases involving
diversity jurisdiction and applying state law (GTFM, LLC v. TKN Sales, Inc)?
a. That the U.S. Constitution requires that a jury trial be held only if the controversy
exceeds the amount of $75,000, and the parties involved are all residents of the same
state.
b. That the U.S. Constitution requires that a jury trial be held in all such trials.
c. That the U.S. Constitution does not provide the right to a jury in such situations.
d. That the U.S. Constitution provides that when a federal court has jurisdiction in a
case based solely on diversity of citizenship, the federal court should require a jury trial
only if a state court in that state would require a jury trial.
Answer:
An outside director is a director who lives outside the state of incorporation.
a. True
b. False
Answer:
Which of the following is true regarding respondeat superior?
a. Under that theory, a principal may be liable for not only the contracts but also the
torts of its agents.
b. Under that theory, a principal may be liable for only the contracts of its agents, not
the torts.
c. Under that theory, a principal may be liable for only the torts of its agents, not the
contracts.
d. Under that theory, a principal may not be held liable for either the contracts or torts
of its agent unless the principal expressly authorize the agent’s actions.
Answer:
Executive branch regulatory agencies are located in cabinet departments.
a. True
b. False
Answer:
Which of the following is NOT true regarding remedies for default of a security
agreement?
a. After default, the secured party has the right to take possession of the collateral so
long as judicial process is followed.
b. After properly taking possession of the property, the secured party may then dispose
of the collateral at a public or private sale.
c. If there is a surplus from the sale of collateral, the secured parry is required to return
it to the debtor.
d. If there is a deficiency from the sale of collateral, the debtor remains liable for that
amount
Answer:
The critical test under the Due Process Clause in determining whether jurisdiction over
an out-of-state defendant exists is whether the:
a. defendant has certain minimum contacts with the state such that the maintenance of
the suit does not offend traditional notions of fair play and substantial justice.
b. out-of-state defendant has ever visited the state.
c. out-of-state defendant has certain minimum contacts with the state such that
maintenance of the suit does not offend liberty concepts.
d. out-of-state defendant has ever lived in the state.
Answer:
Which of the following is NOT exempt from a Freedom of Information Act request?
a. Records related solely to the internal personnel rules and practice of an agency
b. Reports prepared by Congress regarding the regulation of an agency
c. Trade secrets or confidential commercial and financial information
d. Information compiled for law enforcement purposes
Answer:
CASE 2 Branham v. Ford Motor Co.(2010) was reversed and remanded for a new trial,
with plaintiff ordered to prove the __________ approach, after the court adopted the
__________ regarding defective product claims.
a. unavoidably safe product, Restatement (Third)
b. inadequate warnings, Restatement (Third)
c. reasonable alternative design, Restatement (Third)
d. reasonable alternative design,Restatement (Fourth)
Answer:
If a sole proprietorship operates under a fictitious business name, then that name must
be registered with the state.
a. True
b. False
Answer:
For a monopoly to be found illegal, which of the following is relevant after market
power is established?
a. Single brand market
b. Multiple brand market
c. Collusion
d. Monopolistic intent
Answer:
Define class voting. Why would a group of investors be interested in a guarantee of
class voting?
Answer:
Define the term “consideration” as it is used in contract law.
Answer:
What is the rule regarding the enforceability of a contract for the sale of goods that
comes within the statute of frauds if no quantity is specified?
Answer:
Bob is selling his home. During the inspection with his broker, Bob discovered that
some of the pipes in the walls had developed tiny leaks. The cost of fully repairing this
condition would cost thousands of dollars and take approximately three months.
Instead, Bob verbally represented to each and every buyer that the house was “in great
shape” and “had no problems.” Carl bought Bob’s house; and six months after the deal
closed, a pipe broke causing ten thousand dollars in damages. What remedies does Carl
have against Bob regarding the sale of the house? Discuss fully.
Answer:
What is the duty of an independent public accountant if, in the course of an audit, the
accountant detects information indicating that an illegal act has or may have occurred?
Answer:
State X has passed legislation to limit the amount of out-of-state widgets sold in the
state. You are asked by an out-of-state manufacturer to file a complaint in federal court
to fight the law. What is your best argument?
Answer:
What is considered in determining the scope of an agent’s implied authority?
Answer:
Jack is an accountant who works for the firm of Readum & Weep. Jack was approached
by Ima Phool, who represents one of Readum’s competitors, Numbers R Us. Jack was
offered a substantial raise to leave his company and work for Numbers. When Jack’s
boss heard this he called him in and said, “If you agree to stay with us for at least five
years, I promise that next year you will receive a promotion with a 50% raise, and a
5-year contract.” Jack turned down the offer and stayed with Readum. Nine months
later Jack was dismissed due to corporate downsizing. Can Jack legally enforce his
boss’s promise? What theory or theories would Jack use? Discuss fully.
Answer:
Explain requirements for formation of an S corporation.
Answer:
Define a joint venture and list the elements necessary for a finding of a joint venture.
Answer:
Joe is the owner of a manufacturing company called ProfitMax. Joe finds out that a
union is attempting to organize the employees at ProfitMax. Joe tells you that he will
never deal with a union and that he has no plans to pay a higher wage if the union is
elected. Joe has plans to tell his supervisors that they may not encourage union activity.
Joe has plans to do surveillance regarding which employees attend union meetings so
that he can fire them. He is also going to announce to all employees that they will get a
raise if they vote against the union. He asks you what his obligations are if the union
gets elected and if his other plans are legal. He also wants to know what he can expect
from his supervisors, some of whom he is suspicious of supporting the union. What
would you tell him?
Answer:
Indicate how a seller may disclaim warranties under the UCC.
Answer:
What is a preference under the bankruptcy code? What time period is reviewed to
determine if a preference has occurred? When does a long-term debt payment to a bank
qualify under the ordinary course of business exception?
Answer:
Explain the scope and purpose of Section 11 of the Securities Act of 1933 regarding
misleading registration statements. What is the state of mind required in order to
establish a violation of Section 11?
Answer:
Set forth the difference between firm commitment underwriting and best-efforts
underwriting.
Answer:
Which categories of documents in the federal government’s possession may the
government refuse to provide for public inspection under the Freedom of Information
Act?
Answer:
Set forth the circumstances when courts in the United States will honor a
choice-of-forum clause.
Answer:
In an effort to promote family time, State X passes a law prohibiting the advertisement
in the state of movies rated “restricted.” The law is challenged by a coalition of state
newspapers on the basis that it violates the First Amendment of the U.S. Constitution.
Set forth the test the court should apply in order to determine whether the law is
constitutional and how the court would likely rule.
Answer: